Reading the Costa Rica mining law, mining regulation, environmental law and environmental regulations and guidelines is unlikely to inspire the academically inclined; whilst some of the concepts are sophisticated (and even novel in the case of certain aspects of its environmental law), the international mining lawyer and her client ultimately will conclude that the mining regulation portrays the influence of bureaucrats and government lawyers with good intentions, possibly, but a lack of experience. The preoccupation with forms, lists, procedures and state interest distracts the authors from establishing a sound regulatory framework to attract investment. Perhaps, inevitably, one might conclude that this is the intent. If the law were amended to remove the right of the state to have an interest in future mines (ranging from 33% to more) and make clear that, once awarded, title could not be revoked for subjective criteria, we would substantially rerate the country.

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Costa Rica, officially the Republic of Costa Rica, is a country in Central America, bordered by Nicaragua to the north, Panama to the southeast, the Pacific Ocean to the west, the Caribbean Sea to the east, and Ecuador to the south of Cocos Island. Gold is mined on the southern Pacific coast and in the northwestern regions of the country; however some controversy exists as to the ecological impact of the methods employed in these extractions. Silver is also mined in the western part of the country but not extensively. Other mineral deposits found in the country include manganese, nickel, mercury, and sulphur, but these remain undeveloped. Petroleum deposits have also been identified in the southeastern region, but their exploitation has been deemed uneconomical. Salt is produced from seawater.

PRINCIPAL LEGISLATION AND REGULATOR

Costa Rica’s principal mining legislation comprises the National Constitution of 7th November 1949, the Mining Code (1982)(No. 6797) and the Mining Regulation (2001). All natural resources belong to the State, which may grant exploration and mining rights to individuals or entities, national and foreigners with domicile or legal representative within the national territory, through the General Mining Directorate (DGM). The DGM is the main regulatory body, responsible for assessing, granting and monitoring exploration and mining concessions. Hydrocarbons, radioactive minerals, hydroelectric energy, among others, are reserved by the State. The last amendment to the Mining Code (Law No. 894) prohibited the granting of exploration permits and exploitation concessions for developing open pit mining activities, which reflects an increasing movement to protect Costa Rica’s tourism, beauty and biodiversity from the impacts of the more disruptive forms of mining.

GRANT AND FORMS OF MINERAL TITLE

Mining rights come into effect from their registration in the National Registry. There are two principal forms of title identified in the Mining Code, namely, exploration permits and exploitation concessions:

Exploration Permit - allows the holder exclusive access to explore for minerals listed in the licence (Art. 19); the applicant may specify the minerals being sought and, ultimately, can seek to protect its right to other minerals if they are found (Art. 28). The permit is granted for three years, but may be renewed for a further two years (Arts. 20 and 23(a)). Each period is subject to the discretion of the DGM. The maximum area per permit is 20 km².

Exploitation Concession - provides the holder with a right to extract minerals. An exploitation concession may be granted by the Minister for a period of 25 years and may be renewed for a further 10 years (Art. 30). In exceptional circumstances of known mineralization, the applicant may obtain an exploitation concession without holding an exploration permit (Art. 27). The concession area ranges between 1km² and 10 km². Mining activities must commence within the first two years of the concession and may not be suspended for more than six months, otherwise the mining concession may be cancelled. In order to obtain an exploitation concession it is necessary to complete a technical report and an EIA.

DEVELOPMENT CONSIDERATIONS

Pursuant to the Mining Code and Annex I of the EIA Procedures Regulation, all exploration and mining activities are subject to an environmental review process and one can assume that a mine will require an EIA. An EIA can only be carried out by an Environmental Consultant who has been approved by SETENA (the government agency responsible for environmental assessments). The timelines and procedures for an EIA evaluation are clearly set out in legislation and regulations. The holder of an exploration permit or mining concession is entitled to occupy surface land via an easement, with the prior agreement of the landowner. When an agreement cannot be reached, the titleholder may require the government to commence expropriation procedures.

Costa Rica, which means “Rich Coast”, has an incredible abundance of flora protected by a large scheme of national parks. It is one of the most biologically rich countries in the world, containing almost 5% of the world’s biodiversity on only about 0.25% of the world’s landmass. It boasts more than 9000 species of flowering plants, 1000 orchids and about 800 species of ferns. Costa Rica also has over 200 species of mammals, 850 species of birds, 220 species of reptiles, 200 species of amphibians and over 300,000 species of insects. Key environmental challenges in Costa Rica include deforestation, urbanization and pollution.

PRINCIPAL LEGISLATION AND REGULATOR

The Constitution (1949) states in Article 50 that: “Every person has the right to a healthy and ecologically balanced environment, and is entitled to complain against any acts that may infringe said right and claim redress for the damage caused.” The principal environmental law is the Law of the Environment (1995) (Ley Orgánica del Ambiente), which reiterates the principle from the Constitution in Article 2, stating that: “Everyone has the right to enjoy a healthy and ecologically sustainable environment, as well as the duty to preserve the environment, according to Article 50 of our Constitution.” Additional legislation of importance to the mineral resource sector includes the Mining Code of 1982 (issued in 1984), the General Regulation for the EIA Procedures of 2004 (Executive Decree 31849) (EIA Procedures Regulation), and EIA Manuals, approved by various Executive Decrees. The EIA procedures in Costa Rica are centralized with the National Environmental Technical Secretary (SETENA), which is an agency of the Environment, Energy and Telecommunications Ministry.

EIA PROCESS

Pursuant to the Mining Code and Annex I of the EIA Procedures Regulation, all exploration and mining activities are subject to an environmental review process, except prospecting that does not involve the use of machinery (category C projects). According to Article 28 of the Mining Code, the operator may choose between the submission of an EIA or an initial environmental assessment procedure. If one elects to pursue the option of an initial environmental assessment, the first step is to complete an environmental evaluation form (D1 or D2) and submit the form to SETENA. Once the evaluation form is reviewed, the project is placed in one of the following categories: category A: high potential environmental impact; category B: moderate potential environmental impact, which is further subdivided into two subcategories: B1: moderate-high potential environmental impact and B2: moderate-low environmental impact potential; and category C: low environmental impact potential.

Further clarification on these categories is provided in Annex 1 of the EIA Procedures Regulation, which outlines the following:

Category A: All mining of uranium and thorium; all open pit base and precious mines; other mines depending on the volume of material proposed to be processed; exploration with the use of machinery, including drilling.

Category B: Prospecting with the use of machinery, but not drilling.

Category C: Prospecting without the use of machinery.

If the evaluation reveals that the project classification is a B2 or C project, then the procedure ends with the submission of a Jurisdictional Oath of Environmental Compromises (DJCA). If the project falls under category B1, then an Environmental Management Plan (Plan de Gestión Ambiental, PGA) is needed. If SETENA determines that the project falls into category A (as most mining projects will), then a full Environmental Impact Study (EIS) must be conducted. These studies can only be carried out by an Environmental Consultant that has been approved by SETENA. SETENA may grant the environmental licence whether or not the activities meet the requirements stated in the DJCA, PGA and EIS.